Economy rocks New York City landmarks

Economy rocks New York City landmarks

NEW YORK Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

More than 500 New York restaurants have closed their doors this year, and others are expected to follow as diners rein in their spending and dining-out frequency. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

Meanwhile, as numerous lesser-known establishments grapple with the current business environment, several of the city’s most famous restaurants—Tavern on the Green [3], Café des Artistes [4] and the Rainbow Room [5]—either have closed or face operational hurdles because of financial woes, union troubles or tenancy issues. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

Some observers predict that some of the city’s old-guard fine-dining operations in fact could succumb to the unforgiving business environment, pointing to their sluggish sales, expensive overhead and skyrocketing employee benefits. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

“There is a sense that several major iconic restaurants are in play [or transition],” said Tim Zagat, co-founder and chief executive of Zagat Survey. “But I think they are all affected by the recession, and it is noteworthy that they are also among the relatively few New York City restaurants that are unionized. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

“Though it is a little nuanced, I think it’s right to say there has been a passing of a certain kind of formal fine dining.” Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

In the case of Tavern on the Green, one of the city’s highest-grossing restaurants, operator LeRoy Adventures Inc. filed for Chapter 11 bankruptcy protection Sept. 9, blaming the economy and the recent loss of its contract with New York City’s Department of Parks and Recreation, which owns the Central Park location. In its court filings, the operator of the 75-year-old restaurant indicated its liabilities totaled between $1 million and $10 million and that the number of creditors totaled fewer than 50. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

“The two major factors for the filing were that, like so many restaurants nationwide and especially in New York, we suffered under the economic crisis,” Tavern spokeswoman Shelley Clark said. “And when the city said it would not renew our lease, it put us in an untenable situation with our creditors and vendors. We thought this was the only responsible thing to do.” Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

LeRoy Adventures lost its contract to operate Tavern on the Green last month when New York City’s parks department named Dean Poll, chief executive of Boathouse LLC and operator of The Central Park Boathouse restaurant [6], as its new licensee. Poll won a bidding war for Tavern’s operations after agreeing to spend $25 million to renovate the restaurant, install environmentally friendly technology and pay a larger percentage of annual sales—said to be as high as 20 percent—to the city. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

Tavern on the Green reportedly generated annual sales totaling in excess of $30 million in recent years, and in 2008 alone booked about $37.6 million. Under the current agreement, the restaurant pays the city only an annual fee of $1 million plus 3.5 percent of the gross annual receipts. Poll takes over the contract in January. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

At Café des Artistes, paying the employees’ health and pension benefits reportedly proved too costly for George and Jenifer Lang, owners of the 92-year-old restaurant. They closed the doors of the popular restaurant Aug. 28. The company filed for Chapter 7 liquidation Sept. 9, citing $250,000 in health benefit obligations and $116,500 in pension benefits, the New York Times reported. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

Jenifer Lang, who with her husband, operated the renowned fine-dining establishment in the landmark Hotel des Artistes on Manhattan’s Upper West Side for more than 25 years, told The New York Times that closing the restaurant was like experiencing “a death in the family.” Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

The Rainbow Room, which opened in 1934 on the 65th floor of 30 Rockefeller Center, quickly became known as a tourist attraction and special-occasion destination. However, issues between its last operator, Cipriani Fifth Avenue LLC, and landlord Tishman Speyer led to a bitter lease termination dispute that resulted in the establishment’s temporary closure June 5. Reportedly, the Ciprianis had been having other problems at the Rainbow Room for some time. Citing the economy as the reason, the company shuttered operations at the Rainbow Grill, the restaurant located adjacent to the Rainbow Room, on Jan. 12, leaving only the banquet hall and ballroom open for business. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

Tishman Speyer hired industry veteran Barry Wine to find a new Rainbow Room operator, but neither the selection nor the reopening date have been set. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

“These are all formal fine-dining restaurants and in that sense I hope they will be preserved, that someone will be found [to reopen] Café des Artistes,” Zagat said. “The situation with Tavern on the Green is very different because the city is trying to make as much money as possible after having given Warner LeRoy such a great deal for so long. Now maybe they’re trying to show how tough they are and get as much as they can. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

“But by doing that they certainly drove away the best operators—the people who might have made it a great restaurant,” he said. “Now, given the stringent requirements by the city, it’s going to be hard for anybody to make money with the restaurant. Also, this kind of pressure makes it less likely the restaurant will be a standout.” Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

In addition to the increased number of restaurant closings, several upscale establishments have moved from their original locations because of real estate and landlord issues. Two fine-dining stalwarts reopened in September: the Livanos family’s Oceana seafood restaurant in the McGraw Hill building, and the Charlie Palmer Group’s Aureole [7] in the Bank Of America building. This month another longtime fine-dining restaurateur, Tony May, also reopened his former San Domenico restaurant under a new name, SD26, at a new address in lower Manhattan. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

Even though those larger, well-known restaurants are facing problems, it is the smaller, less famous restaurants that are experiencing the greatest danger, said Michael Whiteman, a New York City-based restaurant consultant. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

According to the NPD Group, based in Port Washington, N.Y., 512 New York City restaurants already have closed this year. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

“Lots of smaller, less-visible places are shuttering, and there’s been a steep decline in the number of people eating out and the amount they are spending,” Whiteman said. “The number of restaurant seats grew far more rapidly than the number of people available to fill those seats. Newer restaurants, infected by genuinely infamous, irrational exuberance, were developed with excessive investment and, in some cases, outrageous rent burdens that only could be sustained on the back of $18-$20 first courses and $16 martinis. For most new operators, those kinds of checks are at present unavailable.” Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

That, he said, is why “Restaurant Week” pricing remains in effect even though summer’s over. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

“Dozens of operators are doing everything they can to get people in the door,” Whiteman said. “The more expensive restaurants are losing proportionally more business as people trade down—either by ordering cheaper items or by moving to cheaper restaurants. Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.

“This is not just a restaurant problem. Take a bus down Fifth Avenue from 59th Street to 14th Street and gasp at all the empty storefronts.”— [email protected] [8] Hit hard by the still-declining economy and other operating challenges, the New York foodservice community is struggling with a hostile business climate that already has overpowered several of the city’s biggest restaurants.